Land and Building Transaction Tax

Land and Building Transaction Tax (LBTT) is payable by the purchaser in a land transaction which occurs in Scotland. At Stringer Mallard, we can provide guidance on LBTT in the Harrogate area.

From 1 April 2018, a new Land Transaction Tax (LTT) replaces Stamp Duty Land Tax (SDLT) in Wales. LTT is broadly consistent with SDLT, but also introduces some key changes. Here, we outline these.

Who pays the tax?

LBTT is payable by the purchaser in a land transaction occurring in Scotland. Stamp Duty Land Tax (SDLT) applies to land transactions in England and Northern Ireland and Land Transaction Tax (LTT) applies in Wales.

What is a land transaction?

A transaction will trigger liability if it involves the acquisition of an interest in land. This will include a simple conveyance of land such as buying a house, creating a lease or assigning a lease.

When is the tax payable?

The tax has to be paid when a contract has been substantially performed. In cases where the purchaser takes possession of the property on completion, that will be the date. However, if the purchaser effectively takes possession before completion - known as ‘resting on contract’ - that will be regarded as triggering the tax.

Residential rates of LBTT

Residential property

Band % Rate

£0 - £145,000

0

£145,001 - £250,000

2

£250,001 - £325,000

5

£325,001 - £750,000

10

£750,001 and over

12

The rates apply to the portion of the total value which falls within each band.

First-time buyer relief

A LBTT relief applies for first-time buyers of properties up to £175,000. The relief raises the zero tax threshold for first-time buyers from £145,000 to £175,000, and, according to the Scottish government, 80% of first-time buyers in Scotland will pay no LBTT at all. First-time buyers purchasing a property above £175,000 also benefit from the relief on the portion of the price below the threshold. So all first-time buyers will benefit from a relief of up to £600.

Higher rates for additional residential properties

Higher rates of LBTT are charged on purchases of additional residential properties (above £40,000), such as buy to let properties and second homes.

The main target of the higher rates is purchases of buy to let properties or second homes. However, there will be some purchasers who will have to pay the additional charge even though the property purchased will not be a buy to let or a second home. The 18 month rules set out below will help to remove some transactions from the additional rates (or allow a refund). Care will be needed if an individual already owns, or partly owns, a property and transacts to purchase another property without having disposed of the first property.

The higher rates are 4% above those shown in the table above (3% prior to 25 January 2019). The higher rates potentially apply if, at the end of the day of the purchase transaction, the individual owns two or more residential properties.

Some further detail:

purchasers will have 18 months to claim a refund of the higher rates if they buy a new main residence before disposing of their previous main residence

purchasers will also have 18 months between selling a main residence and replacing it with another main residence without having to pay the higher rates

a small share in a property which has been inherited within the 18 months prior to a transaction will not be considered as an additional property when applying the higher rates

there will be no exemption from the higher rates for significant investors

LBTT includes an 18 month period rather than 36 months which applies for Stamp Duty Land Tax (SDLT).

What our clients say

“ I use Stringer Mallard for several of my businesses and have found them to be a friendly, supportive and professional team that are happy to help.

The combined knowledge and experience within the team mean that my queries are always answered and I feel confident in the answers that they give. The services that they provide are tailored to me and my businesses rather than a ‘one size fits all’ approach. I have found them to be flexible and willing to work with me, providing valuable insights into my business. ”

Jason Clay - Director - Quarters Developments Ltd

“ I have used Stringer Mallard for many years and they have provided an outstanding quality service tailored to my business requirements. I would highly recommend them to anyone looking for an accountant who can explain things in plain English. I can discuss all my business matters with them and find their advice most helpful. They have played a leading role in the evolution of my businesses over the last few years. ”

Paul Walker - Managing Director - Auto VIP

“ We have used the services of Stringer Mallard for many years within our training business and have always found the service to be excellent! Stringer Mallard’s approach is extremely entrepreneurial and we have found their business advice to be invaluable. I would have no hesitation in recommending Stringer Mallard’s services and have indeed done so to many of my associates and friends. ”

Paul Hughes - Director - Hughes Training Solutions Ltd

“ We have been with Stringer Mallard for several years and they have a great team who have dealt with our financial affairs efficiently and professionally, whilst being very friendly and approachable. Andrew is always available to discuss our business and is a valuable source of impartial advice. ”

“ Working in the Financial Services arena ourselves, we need an Accountancy practice that not only understand the technical and legislative side of our industry but also appreciate the importance of the personal service side and building a relationship based on trust and sound advice. Stringer Mallard are able to provide all of this and at a price that is very competitive with the big high street firms! It’s a cliché but they really are big enough to cope but small enough to care. ”

Kirk James - Director - Lofthouse Gate

“ I have worked with Stringer Mallard for several years now and have found them to be professional, approachable and very knowledgeable. They are always on hand for any queries and have shown an interest in my business that I have not experienced elsewhere. I would have no hesitation in recommending Stringer Mallard to my friends and associates. ”

Nigel Coughlan - Director - COW Hold Ltd

“ I moved to Stringer Mallard several years ago, when I faced a challenging situation in my retail business. I found Andrew Stringer to have a level headed and optimistic and enthusiastic approach to my particular problem. He was connected well enough to arrange meetings that led to me being able to get back on track with renewed confidence. With a plan, support from a new bank and with Andrew’s very personal support to myself and my business, I was able to drive the business forward, which has since tripled in turnover and quadrupled in net profits. This in turn however attracted bigger tax liabilities. Stringer Mallard have a tax planning specialism. I would only work with a company and a scheme that operates both within the law and one that has an in depth and thorough understanding of tax law. ”

Jeremy Beaumont - Rhodes-Wood Ltd

“ We have employed the services of Stringer Mallard since 2004, Andrew and his team have helped Clean And Tidy expand our business with their professional and direct approach to our accountancy requirements. They have advised us on all aspects of our business and helped us with ideas and how to grow our business. It is very valuable to have someone there who you can call at anytime and get the right advice or be pointed in the right direction. They make things happen. We highly recommend the services of Stringer Mallard. ”

C A Tolmie - Director - Clean and Tidy

“ Stringer Mallard have been our accountants in the UK for 15 years and during that time they have been an important factor in the growth of our business. Funville started from nothing eight years ago and has grown every year since. Our relationship is simple; if we have a problem or a strategic decision to make, we call them and they are involved from start to finish. Their advice and input is simply invaluable and of great importance to us. ”

Stringer Mallard, Harrogate Accountants

We recognise that being in business, especially leading a business, can be an isolating experience. We are your business partner for all the decisions you have to make, genuinely assisting in bringing to life your goals and ambitions.